Even though people are watching their dollars right now because of inflation, there are a host of financial budgeting mistakes you can easily avoid.

Here are four budgeting blunders to sidestep anytime you’re watching your finances. 

Budgeting Mistake #1: Skipping Savings

In tough times, people always want to know: should I pay off debt first or should I save money first? My answer is always the same: you have to do BOTH! 

Unfortunately, a lot of folks inadvertently blow their budget by failing to include a SAVINGS category in the budget. The problem with skipping savings is that as soon as any little emergency occurs – like a flat tire — you’re going to have to use a credit card, and now you’re racking up unnecessary debt. Plus interest. So always factor savings into your budget. Saving money doesn’t just help you out of jams or emergency situations, building up your savings also lets you reach your personal or financial goals. 

Budgeting Mistake #2: Forgoing All Fun

This may shock some viewers, but I always urge people to factor in some “fun” into their budget. Think of a budget as a spending plan of action. It shouldn’t feel overly restrictive, like a financial straight jacket. Besides, we all work hard to earn our money. So it’s best to just plan and budget for one or two pleasure items each month. As long as you’re not going crazy spending huge sums, or spending more than you’re earning, you can safely budget for whatever you’d like: travel, clothes, electronics, etc. 

The bonus is that by including something you WANT to spend money on into your routine, monthly budget, you’re far more likely to stick to the budget because you won’t feel deprived.

15 Ways to Fight Inflation, Higher Interest Rates and a Recession 

Budgeting Mistake #3: Excessive Cutting 

There are some things you really shouldn’t remove from your budget — mainly because it can backfire, or it can harm you in the long run. Two examples: some people say “I can’t afford to save for retirement.” I say: “You can’t afford NOT to.”  Setting aside money for your future is critical. So don’t completely nix retirement contributions as a way to trim your budget. Also, don’t cut from your budget things like your car insurance or medicines you need. You don’t want Murphy’s Law to strike: and as soon as you drop your car insurance, that’s when you get into an accident, or you stop taking prescriptions and get sick. Now you have bigger problems on your hands. 

Budgeting Mistake #4: Ignoring Budget Busters

A final mistake people make when budgeting is that they overspend in a certain category or they find that they somehow blow their budgets — month after month — but then they never make any adjustments or do anything about it. I’ve found that people generally have four different categories of budget busters, due to LIFE events.